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Cloud vs. On-Premise Software

22 Aug 2018
Alex Knight
22 Aug 2018

Cloud vs. On-Premise Software: Which is right for you?

The Rise of Cloud-Based Systems, is newer, better? 

With advancing technologies and government initiatives around Industry 4.0, everything is moving to cloud-based systems, and connecting people, plant and systems with Internet of Things (IoT). Moving all systems to be cloud-based accelerates the progress you’ll make towards succeeding in the fourth industrial revolution, and the buying trend in the market is reflecting that. 

According to one study published in 2015, 93 percent of enterprises used cloud-based software or system architecture. In addition, use of hybrid cloud systems increased from 19 percent to 57 percent.  

Even on platforms like Microsoft Office are moving to cloud; with roughly a third of all Microsoft platform users, opting for Office 365 ahead of the traditional on-premise equivalent, Office 2016[1].  

But why is this change happening? And how could your business benefit from moving to cloud-based platforms? What are the differences between cloud-based and local systems, and why is cloud-based deemed to be better?  

This blog will compare various factors of both cloud-based and local systems. 

The Differences

The main difference is how the 2 systems are deployed: 

  • While On-premise (Local) software is installed locally, on a company’s own servers,  

  • Cloud-based software is hosted on the vendor’s servers in secured and monitored data centres. 

This is all well and good, but what does it mean to your business?  

Cloud-Based Advantages 


1. Cost​

Perhaps the most important difference is in the cost. Cloud hosted software has a number of advantages over on-premise solutions. 

  • Lower initial upfront cost 
    Cloud-based systems present a lower initial upfront cost, whereas with On-premise it is greater initially, and lower monthly costs are bound to follow. Payments for cloud-based systems are more spread out over time.  
  • Predictable costs over time 
    Issues may arise with on-premise hosting, incurring additional costs to fix them, but with cloud-based systems, responsibility is with hosting provider to absorb maintenance costs, meaning you don’t pay any more that what you signed up for. 

  • No additional hardware investment 
    Local server costs include hardware, maintenance and replacement after every 3-5 users. Cloud-based avoids this extra cost as there is no hardware to care for. 

  • Scalable without addition hardware/infrastructure costs 
    Cloud-based systems do not require any further upgrade, hardware or software to support more users 


2. Security

A common misconception with Cloud hosted software is that it's less secure than on premise solutions. This actually isn't true, and cloud actually have the following advantages: 

  • Information is spread across multiple highly encrypted points  
    This can be confusing, but this means that even if it was possible to hack into your data hosted in the cloud, it would only be a small part; and therefore hackers would only be able to see a limited amount of data. 
    This is compared to on-premise, which may only have a single access point, where if it was possible to break through it, would provide access to everything. 

  • Security is continually monitored 
    Data centres can put security measures in place that many businesses simply can’t afford. These include real time monitoring of Firewall defences and attempted breaches of systems, which means your data is likely safer in the cloud than on a local server. 

  • Security penetration is tested to ensure no weaknesses 

  • Cloud Systems are Encrypted 
    Local systems would require SQL Enterprise for fully encrypted databases (with a starting price of around $14000) 



3. Availability

Cloud availablityAvailability is perhaps the most publicised benefit of cloud-based systems.  

  • Access the systems from wherever required 
    Users don’t have to be in the office to access the system. You can access your information securely, anywhere that has Wifi. This means that travelling representatives or field engineers can view key information via any device while out of office.  

  • Systems are run across an array of servers to provide high availability 
    Because software providers will use a service like Amazon Web services or Microsoft Azure, which have servers across the world, you'll automatically connect to the one closest to you; meaning that download time is quick and easy.  

  • Global foot print 
    With a widespread global footprint, if a natural disaster hits one of the servers holding your data, you actually won't lose any data at all. The same applies for if your laptop is stolen or broken.  



4. Implementation

ImlementationIf you remember installing Windows operating systems from a disk, you probably also remember the hassle that came with it. Cloud based platforms are typically easier to implement.

  • System ready to use straight away 
    No hardware needs to be installed before using a cloud-based system, which means a quicker start-up process. 

  • Upgrade to as many users as required straight away 
    As mentioned previously, local systems require maintenance or even replacement after a certain number of users, which incurs extra cost and prolongs the users’ ability to use the system. 

  • Upgrade to additional apps straight away 
    Maybe you initially bought an entry level system for your business, but then you started growing, and decided you need more functionality or additional user licenses. With cloud-based systems, you can purchase upgrades in the app itself, and receive them instantly. 


5. Collaboration

CollaborationOften overlooked as a benefit of cloud-based systems, but collaboration is made easier, both internally, and with customers, suppliers and partners. 

  • A company is always in full control of their own data 
    Due to the Data Protection Act of 1998, it's illegal for a third party to own your data. Only you can own your data, putting you in complete control when sharing information through cloud platforms.  
  • Data can be captured from and shared with specified suppliers or customers 
    More powerful than sharing snapshots of reports via email, you're able to share reports in the interactive mode that you created them. Helping to build customer confidence.  

  • Documents can be edited at the same time 
    Typically, collaborating with a customer will involve numerous back-and-forth sending various revisions of spreadsheets to each other, never saving over the old ones, until you reach a version you're happy with. With apps like Office 365, Google G-suite, and almost any cloud-based system, multiple parties can edit documents simultaneously; where changes are tracked on who did what, when, and for how long.  


Cloud-Based Disadvantages

Despite how easy cloud systems make it to collaborate, and the improved security, there remain some benefits to using on-premise systems that might be more important to your business. 

1. Customisation

  • Limited ability to customize Customisation
    Cloud systems are generally configurable to a company’s needs and wants, however this may be limited as a result of the way the cloud solution is hosted. It may not be able to support a very complex system. Local systems are completely under your own control, so you can determine how the system is customised and upgraded. Though this will likely come at a high price. 


2. Connectivity


  • Requires Internet Connectivity 
    Probably the biggest common objection. Reliable Internet access is required to ensure productive working on a cloud-based system. In comparison, local systems do not rely on connectivity or other external factors; so you can ensure constant up-time on the systems it's installed on. 




Cloud-Based vs On-Premise, which is better?  

It’s true that many different businesses are taking advantage of the more accessible cloud-based software available to them despite the potential disadvantages centred around the lack of available customisation, in favour of the costlier on-premise systems. 

If you’re still unsure about what kind of system is right for you, contact Valuechain on 03301 200050 and one of our team will be happy to discuss your requirements. 



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